Insurance giant AIG settles fraud case for $1.6 billion

[JURIST] American International Group (AIG) [corporate website], one of the world's largest insurance companies, has agreed to pay $1.64 billion to settle [agreement text, PDF] fraud, bid-rigging and improper accounting charges, New York Attorney General Eliot Spitzer [official website] announced [press release] on Thursday. The settlement, which does not include former chairman and CEO Maurice "Hank" Greenberg [Wikipedia profile], ends civil litigation against the insurance company filed by the New York Attorney General's Office, the New York State Insurance Department and the US Department of Justice [official website], and will distribute money to investors, policyholders, and other injured states as well as the named plaintiffs.

As part of the pact, the US Securities and Exchange Commission [official website] also settled [press release] with AIG for $800 million. The charges alleged that AIG made multi-million dollar transactions with Gen Re [corporate website] insurance group, a subsidiary of Berkshire Hathaway [corporate website], to improve the company's appearance of profitability. AP has more.

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